An proposed set of regulations on UK bookmakers could be bad news for their bottom lines. That’s the warning Fitch Ratings, an international credit rating agency, issued in a recent statement.
According to the Fitch, UK gaming regulators are prepping a set of draconian regulations on gaming machines such as video poker terminals and slot machines. The biggest impact of the new rules would be to set a £2 ($2.50 USD) limit on wagers at gaming machines. As the current limit is £50, the impact on land-based bookmakers could be profound.
Lawmakers are also considering rules that would greatly reduce the pace of play at video betting terminals (VBTs). Under current rules, punters can wager as much as £100 every 20 seconds.
VBTs have been under scrutiny in the British press for years and are often referred to as, video crack.
Regardless of how they’re viewed in the press, VBTs are big business for UK bookmakers and slowing down their paces would have a major impact on their bottom lines.
According to Fitch’s estimates, bookmakers like William Hill and Ladbrokes Coral would be hit particularly hard. After all, the machines account for about half of the profits realized by both companies as Fitch pointed out saying:
Ladbrokes Coral and William Hill are the most exposed major gaming companies, because of their large portfolios of licensed betting offices. In our downside scenario we assume that Ladbrokes Coral would lose about 35% of gaming machine revenues, leading to FFO-adjusted net leverage remaining above our 4.0x sensitivity guidance for a downgrade for two years.
If there’s an upside to this gloom and doom report it’s that analysts predict the proposed rules would drive more players to gamble online.